BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1144| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 1144 Author: Hall (D) Amended: 6/19/13 in Senate Vote: 21 SENATE PUBLIC EMPLOYMENT & RETIREMENT COMM. : 4-0, 6/10/13 AYES: Beall, Block, Gaines, Yee NO VOTE RECORDED: Walters SENATE APPROPRIATIONS COMMITTEE : 6-1, 6/24/13 AYES: De León, Gaines, Hill, Lara, Padilla, Steinberg NOES: Walters ASSEMBLY FLOOR : 51-19, 5/16/13 - See last page for vote SUBJECT : Public Employees Medical and Hospital Care Act: City of Carson SOURCE : City of Carson DIGEST : This bill, for an employee hired on or after January 1, 2014, requires the employer contribution for post-retirement health benefit coverage for an employee of the City of Carson to be based on specified percentages associated with the employee's credited years of service, which would reach 100% when the employee attains 10 years of credited service. This bill defines credited service as service performed with the City of Carson. Requires that the employer contribution with respect to each employee be mutually agreed upon through collective bargaining, as specified, except for an unrepresented employee, CONTINUED AB 1144 Page 2 for whom the employer contribution would be established by a city council resolution. This bill requires that the employer provides any information requested by the Board of Administration of the California Public Employees' Retirement System (CalPERS Board) that it deems necessary to implement the section. ANALYSIS : Existing law: 1. Establishes PEMHCA, administered by the CalPERS Board, to provide health coverage for employees and annuitants of the State and the California State University. 2. Allows a school or local agency employer to contract with CalPERS for PEMHCA and requires the employee or annuitant contribution, when added to the employer contribution, to cover the total cost of the PEMHCA coverage premium. 3. Defines an annuitant as one who, among other requirements, retires from the system within 120 days of separation from public employment. 4. Does not allow contracting employers to provide PEMHCA coverage to active employees without also covering retired annuitants. However, with respect to the employer contribution for annuitants, provides specified options available to the contracting agency, including: A. An equal employer contribution amount for both active employees and annuitants. Under this option, an employee who retires and meets the definition of annuitant becomes 100% vested and receives an employer contribution amount equal to what the active employees receive; or B. For a contracting agency that joins PEMHCA on or after January 1, 1986, the option to pay a lesser employer contribution amount for annuitants than for active employees as long as the agency increases its contribution for annuitants each year until it equals the agency's contributions for active employees as specified; or CONTINUED AB 1144 Page 3 C. A pre-set "vesting schedule" based on an employee's credited years of service to determine a set percentage of the employer contribution amount for annuitants. Under this option, an annuitant would have at least 10 years of CalPERS credited service to qualify for 50% of the employer contribution and would need 20 years, all with the employer providing PEMHCA, to become eligible for 100% of the employer contribution. At least five years must be with the employer providing PEMHCA; or D. Allows under the 10-20 year vesting schedule, an employer contribution of 100% if the annuitant retired for disability or if the annuitant had 20 years of service, regardless of the length of separation from service prior to retirement. 5. Provides specified and individual variations to the above options and requirements under separate statutes specific to the City of San Diego, school employers, Alameda County Transportation Improvement Authority, and Mariposa County. These statutes are subject to collective bargaining agreements. This bill: 1. Requires the employer contribution with respect to each annuitant to be mutually agreed upon through collective bargaining by the City of Carson and the exclusive representatives of employees of the city. Permits the employer to adjust the amount from time to time through a collectively bargained memorandum of understanding (MOU). 2. Requires changes to the employer contribution to be ratified by a resolution passed by the city council of the City of Carson. 3. Requires, in the case of employees not represented by a bargaining unit, the employer contribution with respect to each annuitant to be determined pursuant to a resolution passed by a majority of the city council of the City of Carson. 4. Requires the City of Carson to certify to the CalPERS Board, CONTINUED AB 1144 Page 4 in the case of employees not represented by a bargaining unit, that there is not an applicable MOU. 5. Defines the credited service to mean credited service performed with the City of Carson. 6. Requires the City of Carson to provide the CalPERS Board any information requested that it determines is necessary to implement these provisions. 7. Specifies that the proposed vesting schedule applies only to the City of Carson and only with regard to an employee of the city who is first hired on or after January 1, 2014. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No According to the Senate Appropriations Committee: Minor, absorbable administrative costs to CalPERS (Special Fund). Unknown, potentially significant savings to City of Carson (Local Fund). SUPPORT : (Verified 6/26/13) City of Carson (source) AFSCME, Local 809 City of Carson Association of Confidential Employees City of Carson Association of Management Employees City of Carson Professional and Supervisors Association ARGUMENTS IN SUPPORT : According to the sponsor, the City of Carson does not currently have a vesting schedule (i.e., annuitants currently get 100% of the employer contribution toward post-retirement PEMHCA if they have 5 years of CalPERS credited service). The City of Carson and its employees' representative have collectively bargained to implement a vesting schedule that would require annuitants to have at least 10 years of credited service with the city to get 100% of the CONTINUED AB 1144 Page 5 employer contribution. However, "this vesting schedule is not currently authorized by law and would require legislative action to authorize an exemption from the pre-set vesting schedule currently in statute." ASSEMBLY FLOOR : 51-19, 5/16/13 AYES: Alejo, Ammiano, Atkins, Bloom, Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau, Chesbro, Cooley, Daly, Dickinson, Eggman, Fong, Fox, Frazier, Garcia, Gatto, Gomez, Gordon, Gray, Hall, Roger Hernández, Jones-Sawyer, Levine, Lowenthal, Medina, Mitchell, Mullin, Nazarian, Pan, Perea, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Ting, Torres, Weber, Wieckowski, Williams, Yamada, John A. Pérez NOES: Achadjian, Bigelow, Chávez, Conway, Dahle, Donnelly, Hagman, Harkey, Jones, Linder, Logue, Maienschein, Mansoor, Nestande, Olsen, Patterson, Wagner, Waldron, Wilk NO VOTE RECORDED: Allen, Beth Gaines, Gorell, Grove, Holden, Melendez, Morrell, Muratsuchi, Stone, Vacancy JL:d 6/26/13 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED